Stopping payments during application stage?

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Hi dodgymonkey, thanks for your question and the admission of courage - it's an all important first step.

An advisor will leap in here tomorrow morning and give you an answer to your query about payments during the application stage and any other queries you may have.

Thanks, and good night.

There is no right or wrong answer to this question, it is a matter of personal preference. There are a few options available to you.

1. Work with your Insolvency Practitioner to get an accurate idea of your true disposable income, and then work out fair pro rata payments for each creditor so that everyone is treated fairly
2. Make token payments to each creditor during the setting up process, for example £1 each
3. Make no payments at all during the setting up process

What course of action you take will make absolutely no difference to the result of any creditors meeting so it really is a matter of what you feel most comfortable with. Personally, I tend to recommend that token payments are made, purely as a sign of goodwill. This allows a little leeway to the debtor during the setting up process, in as much as the disposable income that is not being paid to creditors during this stage can be put aside to allow the debtor to have a little buffer, as it were, to start with
It is to be remembered that no unsecured credit can be used during an IVA, and if there is an unexpected bill during the early stages, e.g. new tyre for the car, boiler needs fixing etc then it cannot be paid for on the plastic as may previously have been the case. If there is a little set aside, and that is a good habit to get into during an IVA anyway, then the debtor can start from a position of relative strength rather than relative weakness and be in a much better position to deal with life’s little emergencies head on.

Should the proposal be rejected (statistically unlikely as no IP will put forward a proposal that they feel has little chance of success, the acceptance rate for example here at ClearDebt at creditors meeting stage is over 97%) then any funds set aside can then be used immediately to fund whatever other options may be available to the debtor, such as bankruptcy, possibly a temporary DMP etc.

Regards.

Thanks Mike! thats a great help..